NNPC, Afreximbank sign $1.04bn deal for Petroleum exploration
The Nigerian National Petroleum Corporation (NNPC) Limited has signed a $1.04 billion facility deal with the African Export-Import Bank (Afreximbank) to finance petroleum exploration in Nigeria in order to boost crude oil production in the country.
The deal was signed at the ongoing second Intra-Africa Trade Fair in Durban, South Africa. The trade fair which opened on Monday November 15, 2021 will run through to Sunday November 21, 2021.
The agreement includes a pre-export/shipment finance facility fostered by a Forward Sale Agreement (FSA) and Offtake Contracts while the NNPC Limited acts as the Borrower and Seller.
According to the agreement, the NNPC Limited will enter an FSA whereby it shall deliver 35,000 barrels of crude oil per day. With this, it is expected that the proceeds of the facility will accelerate tax revenues, boost foreign currency receipts and create thousands of jobs in the oil and gas refining value chain by over $2.4 billion to the immediate benefit of the government. This would therefore improve the balance of trade and Gross Domestic Product (GDP) of Nigeria.
The NNPC Limited Executive Director and Group Chief Executive Officer, Mr. Umor Ajia, signed the deal on behalf of the Corporation. The deal is agreed to be in tandem with the Afreximank’s mandate to promote local content in Africa’s oil and gas industry as well as other mining industries to generate foreign receivables into Africa.
The Afreximbank President and Chairman of the Board of Directors, Prof. Benedict Oramah, who maintained that the deal is very innovative, explained that the bank’s decision is in the context of the world’s climate change agenda, adding that the deal is a case of adopting a balanced approach to achieve their mandate.